Government prepared to negotiate on resources tax

The federal government has indicated the government will compromise over the design of its resources rent tax which threatens to derail investment after holding early talks with a range of energy and mining companies.

Resources Minister
Martin Ferguson
told the APPEA energy industry conference in Brisbane on Monday it was important the government found “a middle ground" with its proposed 40 per cent resource super profits tax (RSPT).

“The Rudd government is committed to a genuine consultation process on the RSPT," said Mr Ferguson. “Around every reform there is room for negotiation about the finer details."

Mr Ferguson added executives from the Queensland based onshore coal-seam gas producers were “the first people in his door" after details of the tax were announced on May 2.

“We are committed to putting in place a stable fiscal regime, competitively neutral with the rest of the industry, that will get coal seam methane and floating liquefied natural gas off the ground."

The Queensland government appealed to the federal government to raise the threshold at which the resources super profits tax (RSPT) would kick in.

Queensland’s minister for natural resources, mines & energy,
Stephen Robertson
, told the conference the state wants the profits threshold increased to at least 11 per cent, rather than the current proposal to use the long-term bond rate of about 5 per cent, which is “far too low".

Mr Robertson added the proposed tax rate of 40 per cent is a matter for the commonwealth government to consider.

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Queensland Premier
Anna Bligh
made a representation to the federal government highlighting the impact of the tax on the state’s nascent coal seam gas-LNG industry, according to Mr Robertson.

He said the industry is at a “critical point of development," with a series of final investment decisions on multi-billion dollar projects due later this year.

Santos
and
Origin Energy
have both deferred investment decisions on multi billion dollar LNG developments due to uncertainty over the RSPT.

Mr Robertson said he couldn’t comment on whether any final investment decisions on Queensland’s LNG projects would still be taken this year amid the fiscal uncertainty overshadowing the industry. However “no individual company has been knocking on my door saying it won’t happen," he added.

APPEA chief executive
Belinda Robinson
responded to Mr Ferguson by saying the intention to introduce the RSPT has had a “very destabilising" impact on the energy industry.

“When we have an issue that has been sold to some extent on misrepresentation, misleading information and attempts to cast this industry [negatively], sometimes we feel we have no choice but to speak up," said Ms Robinson.